Huntington Ingalls Industries
) has decided to shut down the Gulfport Facility - Gulfport
Composite Center of Excellence - by May 2014. This move came in
the wake of weak U.S. Navy utilization and reduced demand for the
Navy's Zumwalt-class destroyers.
The Missouri-based Gulfport shipyard is facing lukewarm demand
for its composite products from the U.S. Navy. Low Zumwalt-class
(DDG 1000) ship construction as well as the U.S. Navy's recent
decision to use steel products on Lyndon B. Johnson (DDG 1002)
has prompted Huntington Ingalls to come up with the decision.
The unit is working closely with the U.S. Navy to complete work
on the Michael Monsoor (DDG 1001) and the mast of Portland (LPD
27) by the end of the first quarter of 2014. The closure will
unfortunately reduce the work force by 427 at the Gulfport yard
either through layoffs or transfers.
The DDG-1000 Zumwalt-class destroyer is the U.S. Navy's
next-generation, guided-missile naval destroyer. Going forward,
these destroyers will help in creating a new generation of
advanced multi-mission surface combat ships. The ship will
consist of a low radar profile, an integrated power system and a
total ship computing environment infrastructure.
In August, the U.S. Navy placed an order with Bath Iron Works, a
General Dynamics Corp.
) affiliate, for the third and final deckhouse with more
traditional steel fabrication.
The largest military shipbuilder in the U.S., Huntington Ingalls
is the prime industrial employer in Virginia. Huntington Ingalls
is a spun-off unit of
Northrop Grumman Corp.
). It has shipyards in Pascagoula, MS, and in a suburb of New
Orleans, Avondale, LA. The latest closure announcement has not
affected these facilities although the company has already
rationalized the Louisiana facility.
Last month, Huntington Ingalls posted impressive second quarter
2013 results on the back of solid program execution at Ingalls
Shipbuilding and Newport News Shipbuilding. The company's
earnings exceeded our expectation by 21.7% and the year-ago
number by 12.0%.
Going forward, the company sees a steady revenue stream from the
construction of five new DDG-51 Arleigh Burke-class guided
missile destroyers and the National Security Cutter Munro
(NSC-6), and also from the mothballing of the nuclear aircraft
carrier USS Enterprise (CVN 65). During the quarter, Huntington
Ingalls won $5.3 billion of new contracts, boosting the total
backlog to $20.7 billion.
Huntington Ingalls presently retains a Zacks Rank #2 (Buy). Apart
from Huntington Ingalls, favorably placed stock in the sector
also includes Zacks Ranked #2
Lockheed Martin Corp.
GENL DYNAMICS (GD): Free Stock Analysis
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